Ministry of corporate affairs (MCA) has amended rules related to the acceptance of deposits by companies. The move will offer more flexibility for startups to raise funds, especially during the pandemic which has severely impacted businesses and the economy.
The amendment allows startups to raise funds through corporate bonds or other convertible instruments for 10 years, as against five years. The department has also changed the period of repayments from five to 10 years. Besides this, an amount of up to INR 25 Lakh received by a startup through a convertible note in a single tranche will not be considered ‘deposits’ under company law compliance.